New York Child Abuse Identification and Reporting Practice Exam

What is a characteristic of Preferred Provider Organizations (PPOs)?

1. Free services for all members

2. No restrictions on provider choice

3. Prearranged costs for services rendered

4. Higher deductibles than other plans

The correct answer is: Prearranged costs for services rendered

A characteristic of Preferred Provider Organizations (PPOs) is the prearranged costs for services rendered. This structure allows members to access healthcare services at a set cost when they use providers within the network. These prearranged costs help manage expenses for both the insurer and the insured, making it easier to predict healthcare expenses and budget accordingly. PPOs typically involve agreements with a network of providers who agree to provide services at discounted rates. This aspect distinguishes them from plans that may offer more flexibility without cost control features, such as some forms of indemnity plans. Members can choose to see providers outside of the network, but doing so usually results in higher out-of-pocket costs. In contrast, options like free services for all members do not accurately represent how PPOs function since members still bear some responsibility for costs. There are also some restrictions on provider choice, particularly when considering the financial implications of going outside the network, which separates this model from ones with no restrictions. Finally, while PPOs may have varying deductibles, focusing specifically on prearranged costs emphasizes the structured financial arrangements characteristic of these organizations.